| Is now the right time to invest in a spa? In recent | | | | value of existing guests and segments and/or |
| months, it seems as if, wherever one turns, hotel | | | | significantly attract new segments either from |
| owners and hotel operators are adding spas to their | | | | competitor hotels or competitor locations? We |
| package of products and services. From the most | | | | believe that this can only be answered by robust |
| luxurious hotels such as Mandarin Oriental and Four | | | | research. |
| Seasons all the way to Butlins and Centre Parks, | | | | The Hotel Solutions Partnership experience is that |
| everyone is getting in on the act. | | | | there is a lot of 'noise' but actually not a great deal |
| Hotel branding companies such as Starwood have | | | | of valid research findings available in the public domain. |
| added spa brands to their portfolio and we've got | | | | There is no shortcut and a serious investor needs to |
| hotel brands like Six Senses which have a spa as a | | | | commit time and energy to researching the specific |
| core element of the offer. | | | | market under analysis. While in many situations the |
| In the 1980s, every hotel seemed to feel the need | | | | spa will serve the in-house population, there will be |
| to add waterbeds, faxes and a mini-bar into the | | | | examples where the spa can be a tool to serve the |
| bedrooms and in the 1990s every hotelier felt | | | | local business and/or residential population better. For |
| obligated to add a fitness room, outsource food and | | | | both the internal and external populations, adopting a |
| beverage, implement branded breakfasts and later | | | | well-known brand for the spa may be an important |
| internet connectivity and game joysticks. In this | | | | element in attracting and reassuring the market. |
| decade, we've seen a headlong rush to add flat | | | | There is no template but it seems that the core |
| screen TVs and free WiFi - and now spas. As the | | | | income stream will be from treatments. Setting the |
| historic examples illustrate, sometimes such | | | | price of a one-hour treatment at the level that the |
| fashionable elements of product or service become | | | | market will bear and using the same yield |
| embedded in the core expectation of guests and | | | | management techniques (fencing rates, volume |
| remain permanent features in brand standards. But | | | | discounts, packaging, advance purchase discounting, |
| some trendy items prove an expensive side show in | | | | etc.) as are employed elsewhere in the hotel to sell |
| the long term. Are spas here to stay as a core | | | | hotel rooms (and on the golf course to sell golf |
| element of hotels or are they a passing fad? | | | | rounds) should ensure that revenue is maximised for |
| Some recent assignments have allowed us to | | | | each of the one-hour slots available for sale in each |
| research the matter and to form some tentative | | | | treatment room each day. |
| conclusions. Adding a spa typically represents a very | | | | Membership income may not be the largest income |
| considerable capital expense and usually considerably | | | | stream but it will be important to have a large |
| more per square meter than the investment in an | | | | enough membership to offset the peaks and troughs |
| equivalent space devoted to bedrooms. The | | | | of hotel occupancy, yet a small enough membership |
| treatments that are sought are subject to quite rapid | | | | so that hotel guests can be offered and they can |
| change as fashions come and go making the | | | | take up packages that include spa elements. |
| requirement to frequently change and refashion the | | | | Membership income is usually made up of two |
| treatment rooms. This is a business that needs a | | | | elements - an initial signing on fee and an annual fee. |
| large capital injection up front and the ability and | | | | Local demographics and other factors will determine |
| willingness to inject further capital fairly frequently. | | | | the rate of churn in membership and the signing-on |
| At the same time, the service that is being offered is | | | | fee can be a significant element of long-term value. |
| very labour intensive. There is typically a one-on-one | | | | Our findings suggest that when the investor injects |
| relationship between the customer and the | | | | the right amount of capital recognising the revenue |
| treatment provider and with service being offered | | | | that can be earned and the profit generated, a spa in |
| seven days a week for ten hours a day or more; | | | | a hotel can indeed contribute to long-term value. The |
| the staffing cost implications are considerable. The | | | | savvy investor will avoid developing spas that are |
| spa business can be characterised as one that has | | | | too large, too expensive, in the wrong hotel business |
| both a high capital and high operating cost. | | | | or the wrong town, with the wrong number of |
| So the first question that needs to be asked is | | | | treatment rooms or offering the wrong treatments, |
| whether adding a spa to the hotel will better enable | | | | unbranded or not operated professionally, with |
| the hotelier and the brand to add to the lifetime | | | | inadequate regard to health and safety legislation. |